Massive reduction in taxes, duties announced in PTI’s third finance bill

ISLAMABAD: Finance Minister Asad Umar on Wednesday presented the Pakistan Tehreek Insaf (PTI) government’s third finance bill which is also the second supplementary budget by this government in the National Assembly, reported ARY News.

Speaking in the National Assembly, Asad Umar said that it was not a budget, but a package for economic reforms. “The government wants a resolution to economic woes of the country”, he said, adding that the government didn’t want next governments to complain about previous government’s [economic] wrongdoings.

‘Supplementary Finance Bill 2019’ in a nutshell

Income tax on banks offering loans for agriculture, low-income housing scheme, and small businesses reduced from 39 per cent to 20 per cent

Non-filers can buy cars above 1300cc but with increased tax

Duty on cars above 1800cc fixed at 25 per cent

Withholding tax on banking transactions abolished for tax filers

Six per cent tax on business bank accounts abolished; super tax on non-banking companies to be repealed from July 1

Responding to opposition’s ruckus, Umar said he wished the opposition would have called out the then finance minister Ishaq Dar when he would read out ‘a pack of lies’ in name of finance bill.

He said that the gas sector was never in deficit, however, due to PML-N government’s policies, it was now in the deficit of Rs. 150bn.

He further said that the previous government had left the country in the deficit of somewhere between Rs. 2500bn to Rs. 3000bn.

Criticising the past rulers over worsening economic crisis, the finance minister said that “these people left the patient in the ICU,” adding that we cannot bring change until narrowing the difference of balance of the payments.

“The exports were left at the lowest level; the economy cannot be put back on the track until settling the budget-deficit”, he said

Commenting on the savings in the country, Umar said the PML-N left the savings at record lowest level of 10.4 in the country.

“Foreign investment cannot be attracted until savings of the country are uplifted”, he said.

Income tax on banks reduced; filers exempted from withholding tax

Asad Umar said that in 6 months, agricultural loans will see an increase of 22 per cent. He said that the government wanted to encourage small businesses, and if they got loans from banks, businesses would flourish.

“Hence, the government is reducing the income tax on banks offering loans for agriculture, low-cost housing, and small businesses, from 39 per cent to 20 per cent”, he said

Finance Minister said that the government wanted to encourage the people to become regular income tax filers, therefore, the government was abolishing the withholding tax for filers on banking transactions.

Announcing the removal of ban on non-filers to purchase cars above 1300cc, the finance minister said they could now buy cars above 1300cc but with an increased tax.

The finance minister also informed that the government was bringing a Rs. 5bn revolving fund for a ‘Qarz e Hasna’ scheme.

He also said the government was ending the six per cent tax regime on business accounts, whereas the business would now need to submit withholding tax details only twice a year.

Finance minister also said that the government was reducing tax on small marriage halls from Rs. 20,000 to Rs. 5000.

No tax on investment in renewable energy projects

Umar said that the government was fully focused on bringing investment in the special economic zone.

“We are abolishing all taxes including sales taxes on green field projects”, he said, adding that investment in green field projects will be exempted from income tax for 5 years.

“Also, investment in solar energy projects will be exempted from all taxes for five years”, he said.

Taxes on corporate sector, banks, slashed

He also said the government was ending the six per cent tax regime on business accounts, whereas the business would now need to submit withholding tax details only twice a year.

He criticised the former government by saying that its taxation model was akin to “giving a rupee from one hand and taking it from another”.

“We are replacing this model with a straight forward taxation approach. From July 1, supertax on non-banking companies is being abolished”, he announced.

“Also, we are maintaining the 1 percent annual reduction in corporate income tax”, he said.

Umar said that although he did not believe the stock market to be the sole indicator of country’s economic progress, he was happy that the government’s initiatives had helped the stock market go up by 3000 points in last three weeks.

Earlier speculations about the budget

According to sources, suggestions for an increase and decrease in the customs and regulatory duty of many various goods has been recommended.

These goods include luxury items, mobile phones, luxurious cars as well as some machinery and raw materials imports.

The main purpose of the package is to create better conditions for investment in a struggling economy that is facing a balance of payments crisis.

According to sources, it has been suggested to increase the duties on imported goods and luxury items. Other items include mobile phones, shampoos, creams and cheese. “It has been recommended to abolish the withholding tax for tax filers whereas 0.6 percent tax on non-filers will remain intact.”

Sources added that, a recommendation has been made to increase the duty for cars above 100CC by 10 per cent. “The ban imposed on non-filers for not purchasing new cars might be removed as well. However, the ban placed on them for not purchasing new properties will remain intact.”

They also said suggestions pertaining to income tax relief per year have been recommended as well, adding that if the aforementioned recommendations are not approved in the mini budget then they will be presented in the yearly budget.